Clarification on deduction of tax at source (TDS) on service tax component on rental income u/s. 194-I of the Income Tax Act.

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..... n received in the Board seeking clarification as to whether TDS provisions u/s. 194-I of the Income Tax Act will be applicable on the gross rental amount payable (inclusive of service tax) or net rental amount payable (exclusive of service tax). 2. The matter has been examined by the Board. As per the provisions of 194I, tax is deductible at source on income by way rent paid to any residen .....

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..... s 194-I of Income Tax Act would be required to be made on the amount of rent paid/payable without including the service tax. 4. These instructions may be brought to the notice of all officers working in your region for strict compliance. 5. These instructions should also be brought to the notice of the officers responsible for conducting internal audit and adherence to these should be checked .....

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